Fidelity & Deposit Co. of Maryland v. Slurry Systems, Inc.

235 F. Supp. 3d 1035, 2016 U.S. Dist. LEXIS 189159, 2016 WL 9306256
CourtDistrict Court, N.D. Illinois
DecidedJuly 7, 2016
DocketNo. 15 C 7016
StatusPublished
Cited by2 cases

This text of 235 F. Supp. 3d 1035 (Fidelity & Deposit Co. of Maryland v. Slurry Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fidelity & Deposit Co. of Maryland v. Slurry Systems, Inc., 235 F. Supp. 3d 1035, 2016 U.S. Dist. LEXIS 189159, 2016 WL 9306256 (N.D. Ill. 2016).

Opinion

ORDER

Elaine E. Bucklo, United States District Judge

In this case, plaintiff Fidelity & Deposit Company of Maryland, a financial entity organized in Maryland with its headquarters in Illinois, asserts claims against Slurry Systems, Inc., (“SSI”) and four individuals arising out of an indemnity agreement for a bond plaintiff provided in conjunction with a construction project SSI completed. One of the individuals, Bryan Wesolek (“Bryan”), has brought a motion to dismiss the claims against him for lack of personal jurisdiction. I grant his motion for the following reasons.

According to the complaint, SSI was awarded a contract with the U.S. Army Corps of Engineers for a project in McCook, Illinois. The contract and federal law required that SSI provide a performance and payment bond for the contract. Plaintiff provided the bond on the condition that defendants execute an indemnity [1037]*1037agreement exonerating and indemnifying plaintiff from any losses, costs, or expenses it might sustain as a result of issuing the bond.

SSI completed the McCook project in December of 2008, but in 2009, it became embroiled in litigation with an entity called Pileco, from which SSI had rented certain equipment for the project. Pileco claimed that SSI owed it over $2 million under the parties’ rental agreement, and Pileco filed a bond claim with plaintiff to collect SSI’s alleged debt. Pileco ultimately sued plaintiff and SSI for payment of the debt,, and after a jury trial, the court entered judgment in favor of Pileco and against SSI and plaintiff. Plaintiff later satisfied the judgment,1 and this action seeks to recover its costs and expenses from its indemni-tors.

Plaintiff bears the burden to establish personal jurisdiction over all defendants. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Where, as here, jurisdiction is contested in a motion to dismiss and decided on the basis of written materials only, plaintiff must make a prima facie showing of jurisdictional facts. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). To determine whether personal jurisdiction is appropriate, I accept all well-pleaded facts as true and resolve any evidentiary conflicts in plaintiff’s favor. Id.

The parties agree that the jurisdictional analysis here boils down to whether Bryan had sufficient, case-related contacts with Illinois for a suit brought against him in the jurisdiction to satisfy constitutional due process standards. That is, I must decide whether specific jurisdiction is appropriate because Bryan’s conduct vis-a-vis the events underlying the complaint reasonably put him on notice that he may be haled into court here.

The parties conducted limited discovery on the issue of personal jurisdiction, and most of the jurisdictional facts are undisputed. All agree, for example, that Bryan is not a resident of Illinois, has never owned or leased real property in Illinois, and does not maintain a bank or other financial account in ’ Illinois. He did not negotiate or sign the indemnity agreement in-Illinois, and the agreement itself does not contain any forum selection clause identifying Illinois as a jurisdiction in which suits arising out of it' may or must be brought. The parties likewise agree that Bryan has conducted no business related to SSI or the indemnity agreement in Illinois, and that Bryan’s first contact with plaintiff was a letter that plaintiff’s counsel sent to him at his Florida address on April 8, 2014, seeking an indemnity payment.

As a general matter, “an out-of-state party’s contract with an in-state party is alone not enough to establish the requisite minimum contacts.” RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997). Plaintiff argues that jurisdiction is appropriate in this case because, in addition to signing the indemnity agreement with an Illinois citizen, Bryan: 1) was married to defendant Dana Wesolek, SSI’s president and co-owner, at the time he signed the indemnity agreement, and thus had a “marital interest” in SSI’s contract for the McCook project; and 2) attended a settlement mediation in Chicago in the Pileco ease (although he was not a party to that case). Neither of these ele[1038]*1038ments establishes constitutionally . adequate minimum contacts with Illinois.

SSI is a closely held corporation co-owned by defendant Dana Wesolek, who is Bryan’s now estranged wife,2 and Dana’s sister. Plaintiff argues that, as Dana’s wife, Bryan had an interest in SSI’s contract for the McCook project because he “stood to benefit in the form of an increase in the value of Bryan’s and Dana’s marital estate,” and that that is sufficient to support personal jurisdiction in an Illinois action to enforce the indemnity agreement. Resp. at 2. Plaintiffs leading case in support of this theory is National Can Corp. v. K Beverage Co., 674 F.2d 1134 (6th Cir. 1982). It is true that in National Can, the Sixth Circuit held that the spouses of two shareholders of a company headquartered, in Kentucky were subject to personal jurisdiction in Kentucky based solely on the spouses’ status as personal guarantors of a contract between the. Kentucky company and one of its suppliers. The court reasoned that because “the marital property laws of all státes connected with this transaction [i.e., Colorado, Minnesota, Kentucky, and North Dakota] give a .wife' a right to share in property acquired by her husband during the marriage,” their “proprietary concern in the success of the business” supported the exercise of specific jurisdiction. Id. at 1137. Bryan challenges the soundness' of the Sixth Circuit’s analysis, but I need not delve into the merits of his challenge because even assuming the National Can court correctly resolved the jurisdictional dispute on the facts before it, its analysis explicitly turned on the law of the four states in question, none of which is at issue here. Notably, plaintiff is silent on Illinois’ marital property laws and offers no analysis to explain why .the result in National Can should .obtain here. Plaintiff is likewise silent as to when Dana acquired her ownership interest ■ in SSI (i.e., before or after her marriage to Bryan), another fact central to the National Can court’s reasoning. .Accordingly, plaintiff has not offered prima facie evidence of the kind the court found to support personal jurisdiction in that case.

The courts in Frontier Ins. Co. v. National Signal Corp., No. Civ. A. 98-4265, 1998 WL 778333 (E.D. Pa. 1998), and Great American Ins. Co. v. Stephens, No. Civ. A. 04-3642, 2005 WL 452349 (E.D. Pa. 2005), both of which plaintiff álso cites, similarly relied upon the “financial interest in the business or person whose obligation [the out-of-state defendant] guarantees” to find the minimum contacts threshold met. Frontier Ins., 1998 WL 778333, at *3. There is no dispute that Bryan’s only financial interest in SSI—of which he has never been an owner, officer, director, or employee—is his putative “marital interest” through Dana.

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235 F. Supp. 3d 1035, 2016 U.S. Dist. LEXIS 189159, 2016 WL 9306256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fidelity-deposit-co-of-maryland-v-slurry-systems-inc-ilnd-2016.